Oil prices steady as Middle Eastern supply concerns ease

FILE PHOTO: An oil pumpjack is pictured in the Permian basin, Loco Hills regions, New Mexico, U.S., April 6, 2023. REUTERS/Liz Hampton/File Photo

NEW YORK — Oil prices were little changed on Monday as concern eased that fighting in the Middle East would disrupt supply and Chinese data suggested weak demand, while an increase in U.S. refining limited any selling.

Brent futures for May delivery settled at $82.21 a barrel, gaining 13 cents. The U.S. crude April contract slipped 8 cents to end at $77.93 a barrel.

“I guess it’s: the barrel half empty or the barrel half full, depending on how you look at it,” said Phil Flynn, pointing to conflicting forces keeping oil prices from moving far in either direction.

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Both benchmarks ended last week lower after bearish Chinese data implied weaker demand in the world’s leading crude importer. Brent closed down 1.8%, although the contract has remained above $80 a barrel for over a month. WTI ended 2.5% lower.

China’s crude oil imports rose in the first two months of the year compared with the same period of 2023, but were weaker than the preceding months, data showed on Thursday, continuing a trend of reduced purchases.

At the same time, oil investors seemed to overlook geopolitical conflict that was initially seen as tightening global crude supplies.

“It seems that the Middle East conflict is not high on the list of driving forces of investors, as it has not led to meaningful supply disruptions,” said Tamas Varga of oil broker PVM.

Yemen’s Iran-aligned Houthis have been attacking ships in the Red Sea and Gulf of Aden since November in what they say is a campaign of solidarity with Palestinians during Israel’s war against Hamas.

Over the weekend, dozens of drones were downed by U.S., French and British forces in the Red Sea area after Houthis targeted bulk carrier Propel Fortune and U.S. destroyers in the region, the U.S. military said.

On Monday, an explosion in the vicinity of a vessel 71 nautical miles southwest of Yemen’s port of Saleef was reported.

Meanwhile, U.S. data has been sending mixed signals about the health of the world’s largest economy.

U.S. job growth accelerated in February, but a rise in the unemployment rate and moderation in wage gains kept the anticipated June interest rate cut on the table. U.S. inflation data is due on Tuesday.

An increase of U.S. refining activity, which could tighten global crude supplies, has helped to limit any fall in oil prices.

“The increasing refining utilization rate has the possibility of popping a storage draw for the first time this year,” Mizuho bank’s Bob Yawger said.

U.S. crude stockpiles have risen for six weeks in a row due to low refining rates. Analysts forecast a 1.4 percentage points increase in refining rates for last week, after they jumped 3.4 percentage points to a six-week high of 84.9% of total capacity the previous week, according to weekly government data. [EIA/S]

Industry data on U.S. oil stockpiles is due for release on Tuesday, while government data is expected on Wednesday.